All cells store fatty acids in neutral lipids (triacylglycerols[TAG] & cholesterol esters) in discrete intracellular lipid storage droplets. In the general cell population, very small droplets transiently sequester fatty acids which are used for membrane biosynthesis and as a source of energy. In adipocytes, which store the main bodily energy reserves, fatty acids are mobilized from very large, TAG-rich, droplets and exported to other tissues. In steroidogenic cells, the droplets contain primarily cholesteryl esters, precursors for steroid hormone synthesis. Our research focuses on the surface composition of droplets and the mechanisms by which lipids are both deposited and hydrolyzed. We find that droplet surfaces in animal cells are coated by related proteins, the perilipins and adipocyte differentiation-related protein (ADRP). Despite its name, ADRP is expressed ubiquitously and occurs on the surface of droplets in nearly all cells examined. However,isoforms of perilipin are expressed primarily in adipocytes and steroidogenic cells. These cell types are unique in that they use a cAMP/protein kinase A (PKA)-mediated process to hydrolyze their stored lipids. Since perilipins are polyphosphorylated by PKA in concert with the lipolytic reaction, we hypothesize that these proteins participate actively in lipid breakdown. To assess the function of perilipins, we have created a perilipin null mouse by targeted disruption of the perilipin gene in murine embryonic stem cells. The perilipin null animals have greatly decreased (65-70%) adipose tissue but appear otherwise normal. Results from lipolysis studies with isolated adipocytes reveal a possible basis for the reduced adipose tissue. To wit, cells from the perilipin knock-out mice exhibit markedly elevated basal lipolysis which is 5-10 times greater than cells from wt animals. These findings confirm our standing hypothesis, which states that perilipin functions to protect stored TAG from unregulated breakdown by hormone-sensitive lipase, the primary TAG lipases in adipocytes. An unexpected finding was the adipocytes from perilipin null animals exhibit a dramatic loss in ability to be stimulated by agents that activate PKA, suggesting that perilipin is required to elicit the full effect of hormone-sensitive lipase, the rate-limiting enzyme in adipocytes. We have proposed that the critical step in lipolytic activation is a PKA-mediated translocation of Hormone-sensitive Lipase (HSL) from the cytosol to the surface of the lipid droplet. With the use of embryonic fibroblasts derived from wild type and perilipin null animals that were stimulated to differentiate into adipocytes, we have determined that perilipin is required to elicit the PKA-stimulated HSL translocation, demonstrating that the absence of perilipin accounts for the diminution of stimulated lipolysis. This conclusion was reinforced by studies with CHO fibroblasts demonstrating that one may elicit a PKA-mediated translocation to lipid droplets only if the droplets are coated with fully phosphorylatable perilipin A. We further find that HSL transloction requires that the enzyme also be phosphorylated at one of its two C-terminal PKA sites (S659 or S660). Thus, as highlighted by the perilipin null mouse, perilipin has two major fuction: 1) in the non-phosphorylated state, this protein protects lipids from rampant hydrolysis and is required for normal deposition and expansion of adipose lipid reserves; and 2) PKA phophorylation of perilipin is required to induce HSL to migrate to lipid droplets and release fatty acids under the stimulated condition. ADRP, perilipin, TIP47 and other proteins of Drosophila and Dictyostelium are related proteins encoded by an ancient gene. ADRP is expressed ubiquitously, and it coats lipid droplet in all cells that do not express perilipin. In tissue scans, we found that ADRP was expressed in lung at a level second only to adipose tissue. Recently, we have pinpointed ADRP expression to pulmonary lipofibroblasts, cells with prominent lipid droplets that serve to remove lipid from the serum and apparently pass these lipids on to type 2 epithelial cells that synthesize and secrete surfactant. We find that type 2 epithelial cells can extract radiolabeled triolein from ADRP-coated lipid droplets isolated from cultured lipofibroblasts, and incorporate these fatty acids into radiolabled surfactant phospholipids (19). Interestingly, antibodies against ADRP block the transfer of lipid into the type 2 cells, suggesting a role for ADRP in the lipofibroblast-to-type 2 cells transfer of lipids